Impact of Governance on FDI: Evidence from Dynamic Panel Regression Models

Fabian Reck

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2020, vol. 66, issue 2, 131-144

Abstract: This paper analyzes the effect of world governance indicators on inward foreign direct investment. The sample covers 38 developed and 82 developing countries between 2002 and 2018. The results of the system GMM regressions suggest that governance indicators are important determinants of inward FDI for developed countries. Moreover, it is shown that it is important to control for dynamic effects. In comparison, for developing countries, other country characteristics – the mean tariff rate – are more important than the institutional setting.

Keywords: International Investment; Long-Term Capital Movements; World Governance Indicators (search for similar items in EconPapers)
JEL-codes: F15 F20 F21 (search for similar items in EconPapers)
Date: 2020
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